Rajesh Shah vs PERTECH COMPUTERS LIMITED

THE complainant No. 4 is a Private Limited Company, where complainant Nos. 1 and 2 are shown to be Directors and complainant No. 3 is shown to be the Managing Director. THE complaint has been signed and verified by complainant No. 1 on behalf of complainant No. 4. All the complainants, however have filed this complaint for obtaining reliefs of directing the opponents to replace and remove defective parts of computer in question to the entire satisfaction of the complainants with a fresh warranty/guarantee and free service of one year, in the alternative to replace the computer in question by a new computer of the same description free of defect and with further free similar warranty/guarantee, and in the alternative to refund full price of the computer in question to the opponents Rs. 6,58,300/- by taking back the defective computer from the premises of the complainants, to pay loss of interest @ Rs. 10,000/- per month and business loss of Rs. 40,000/- per month from February, 1991 till the date of notice dated 6.1.1992 (Rs. 7,25,000) and to pay cost of Rs. 2,500/- (inclusive of notice charges) on following brief facts as alleged in the complaint.

COMPLAINANT Nos. 1 to 3 were unemployed graduates having technical qualification and experience regarding operation and use of computers. With a view to earn their livelihood by employing their skill they started complainant No. 4 Company with small scale operation by giving consultancy service to medium and small scale industries and institutions in and around Baroda, Bharuch and Ankleshwar. Accordingly they cannot be said to be carrying on commercial activity or using their skill for commercial purpose as contemplated under Section 2(1)(d)(i). The computer in question was not purchased for resale. Therefore, the complainants have described themselves to be consumers under the Consumer Protection Act, 1986, (Act for short). The opponent is a Company incorporated under the Indian Companies Act, 1956 and have large scale operations extended throughout India. They are engaged in manufacturing and marketing computers and its consumables. No. 4 purchased three computers as per following particulars from the opposite party : 1. SUN 3861 (One No.) 2. PCAT 286 (Two Nos.) 3. Plotter (One)

Digitizer (One)

L.A.N. The above computers were delivered on 23.10.1990 and were installed on 5.2.1991. The complainants paid price of Rs. 6,58,300/-. The price was inclusive of price for one Plotter, one Digitizer and LAN of PC for three computers. Although the computers were delivered on 23.10.1990, they were lying idle till 4.2.1991 when they were installed and even after installation they were not working upto the satisfactory level. Complainant No. 4 constantly approached the head office and other regional and zonal offices of the opponents on phone, by way of various communications and personal requests as well as written letters. On 18.9.1991 LAN was not working and Trahsreceiver was faulty. Thereafter the Transreceiver was taken by opponent''s personnels for repairs on 5.10.1991. Problem of LAN was still persisting and SUN OS was not working. The Transreceiver box once replaced was also not working. The opponents again took the parts from the said computer for repairs on 12.10.1991. The personnel of the opponents allegedly stated about their having repaired the computers. However there was problem in the mother board and SUN 3861 computer. The mother board was, therefore, taken for testing and repairs. On 12.10.1991 the opponents'' service personnel compelled the complainants to give in writing that the SUN computer was working even though they had taken the mother board for testing and repairs. The complainants were threatened that if they did not give in writing as aforesaid, they would take longer time for testing ad repairing the mother board and indirectly forced the complainants to give in writing as aforesaid. 4. On 29.10.1991 although the mother board was repaired, the computer again did not work to the satisfaction of the complainants. Therefore, the opponent''s personnel again took Ethernt Cards for testing alongwith the mother board. On 4.11.1991, the mother board and Transreceiver box were received and yet the computer was not at all working to the satisfactory level of the complainant as guaranteed and assured by the opponent. The opponent reported that the LAN was not working as LAN cable was faulty.

Under the aforesaid circumstances, the complainants have made grievances with regard to the computer/s in question alleging that there was clear deficiency in service on the part of the opponent and that the computer/s in question were defective. The complainants, therefore, issued notice dated 6.1.1992 calling upon the opponents to pay Rs. 7,25,500/- by way of cost of computers alongwith loss of interest in the sum of Rs. 10,000/- and business loss @ Rs. 40,000/- per month from February, 1991 to 6.1.1992. They have summarised their grievances at length in para 12 of their complaint. They have, therefore. filed this complaint as aforesaid.

First, the opponents gave application Ex. 13 for deciding preliminary objections/ contentions to the effect that the averments contained in the complaint clearly showed that the complainants have been carrying on business in the name and style of HMP Consultants Private Limited and they have alleged mat they have been earning their livelihood by running the consultancy services in the name of that Company. Thus, the complainant No. 4 being the said Company has been carrying on commercial activity and the said Company purchased the computers in question for that purpose. Thus the computers were purchased for their business amounting to commercial purpose within the meaning of Section 2(1)(d) of the Act. Opponent No. 4 gave similar application at Exh. 14. By order dated 15.3.1993 this Commission granted adjournment inter alia observing that reply was not filed on merits and the Commission was not inclined to hear the preliminary issues separately since they involved mixed questions of facts and law. Opponent Nos. 1 to 3 filed written reply at Exh. 17 reiterating their preliminary objections and asserting that there was no defect in the computers sold to the complainants and that there was no deficiency in service rendered by the opponents. They denied allegations with regard to complainant Nos. 1 to 3 being unemployed graduates having technical qualification and having formed complainant No. 4 Company with a view to earn their livelihood accordingly carrying on self- employment. They have also denied the allegation with regard to delay in installation of computers. They have asserted that the complainants were not in a position to take delivery of the computers in question by making balance payment. They denied that they did not make arrangements for installation and the delay was on their part. The opponents always responded promptly and efficiently whenever complainants required their services with regard to the computers in question. Reference has been made to and reliance placed. upon the correspondence between the parties in that respect. They have denied the allegation that they have obtained in writing on 12.10.1991 as per the allegations made by the complainants. It has been asserted that the non-functioning of the computers was always due to the conditions operating at the premises of the complainants and improper handling and operation thereof by the complainants and not due to any defect or deficiency as alleged. They have denied the ailleged loss and liability to compensation as claimed in the complaint. They have dealt with the computers and their functioning in paras 12 and 13 of the affidavit in reply.

PURSIS Exh. 25 reflects that computer in question was given for inspection and repair to the opponents and the complainant was informed by letter of the opponents that he might contact the opponents but due to personal reasons he could not visit the office of the opponents. He, therefore, prayed for adjournment. Exh. 27 is list of documents filed by the complainants'' learned Advocate. The complainants also gave application Exh. 28 to cross-examine Mr. A.I. Rishi, Manager (Co- ordination), Pertech Computers Limited and that application was granted by order dated 26.6.1995. The complainants then gave application Exh. 34 for production of documents with list Exh. 31 and by order dated 3.2.1997 that application was granted. They also issued notice to opponents to produce various documentary evidence as reflected by notice for production with list Exh. 30. By order dated 3.2.1992, opponent Nos. 1 to 4 were directed to produce documents/file affidavit in that respect and to keep Mr. A.I. Rishi present for cross-examination. Accordingly, the matter proceeded for evidence. Exh. 33 is further oral evidence of complainant Rajesh Hasmukhlal Shah and the answers given by him to the questions put by the Commission on 4.8.1997. Thereafter, the matter went by default on behalf of opponents and was fixed for arguments.

UNDER the aforesaid circumstances, the only question that would arise for our consideration will be whether the complainants can be said to be consumers within the provisions contained in Section 2(1)(d) of the Act and whether their case would be covered under any of the provisions of the Act. The definition of consumer as contained in Section 2(1)(d)(i) of the Act reads as under : "Consumer" means any person who (1) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose."

NOW, the complainants have submitted that the computers in question were not purchased for resale or for any commercial purpose. However, it is an admitted fact that complainant No. 4 is a Private Limited Consultancy Company registered under the Companies Act, 1956 and the said Company has been carrying on commercial activity. The Honourable Supreme Court has considered the definition of the word ''consumer'' in Laxmi Engineering Works v. PSG Industrial Institute, II (1995) CPJ 1 (SC). It has observed in para 10 as under : "10. NOW coming back to the definition of the expression consumer'' in Section 2(d), a consumer means in so far as is relevant for the purpose of this appeal, (i) a person who buys any goods for consideration; it is immaterial whether the consideration is paid or promised, or partly paid and partly promised, or whether the payment of consideration is deferred; (ii) a person who uses such goods with the approval of the person who buys such goods for consideration, (iii) but does not include a person who buys such goods for resale or for any commercial purpose. The expression "resale" is clear enough. Controversy has, however, arisen with respect to meaning of the expression "commercial purpose". It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning. "Commercial" denotes "pertaining to commerce" (Chamber''s Twentieth Century Dictionary); it means "connected with, or engaged in commerce; merchantile; having profit as the main aim" (Collins English Dictionary) whereas the word "commerce" means "financial transactions especially buying and selling of merchandise, on a large scale" (Concise Oxford Dictionary). The National Commission appears to have been taking a consistent view that where a person purchases goods "with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit" he will not be a "consumer" within the meaning of Section 2(d)(i) of the Act. Broadly affirming the said view and more particularly with a view to obviate any confusion - the expression "large- scale" is not a very precise expression - the Parliament stepped in and added the explanation to Section 2(d)(i) by Ordinance /Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression "commercial purpose" a case of exception to an exception. Let us elaborate : a person who buys a typewriter or a car for typing others'' work for consideration or for plying the car as a taxi can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for "commercial purpose" would not yet take the purchaser out of the definition of expression "consumer". If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a "consumer". In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e. by self-employment, for earning his livelihood, it would be be treated as a "commercial purpose" and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a "commercial purpose", to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., "uses them by himself", "exclusively for the purpose of earning his livelihood" and "by means of self-employment" make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. A few more illustrations would serve to emphasise what we say. A person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer, a person who purchases a lathe machine or other machine to operate it himself for earning his livelihood would be, a consumer. [In the above illustrations, if such buyer takes the assistance of one or two persons to assist/help him in operating the vehicle or machinery, he does not cease to be a consumer]. As against this a person who purchases an auto-rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a consumer. This is the necessary limitation flowing from the expressions "used by him", and "by means of self-employment" in the explanation. The ambiguity in the meaning of the words ''for the purpose of earning his livelihood'' is explained and clarified by the other two sets of words."

In the above case the complainant was registered small scale industry which purchased a Universal Turning Centre machine from the opposite party. It was alleged that the opposite party was guilty of delay in supplying the machinery for a period of more than six months beyond the stipulated date and the machine was also defective. The State Commission allowed the complaint but the National Commission set aside the order holding that the complainant was not a consumer as the machinery was purchased for commercial purpose. Observing as above and upholding the view of the National Commission, the Apex Court held with regard to the explanation added to the definition w.e.f. 18.6.1993 that it was clarificatory in nature and it would depend upon the facts of each case as to whether the explanation would apply or not. The Apex Court further held that having regard to the nature and character of the machine and the material on record, the appellant did not purchase the machine for use by himself exclusively for the purpose of earning livelihood by means of self- employment. In the present case, even the witness examined at Exh. 33 has admitted that the complainants were paying income-tax, maintaining registers of business, maintaining staff of two persons and paying salary of Rs. 1,100/- and Rs. 1,600/- respectively, paying rent in the sum of Rs. 2,500/- per month and carrying on business of management consultancy.

In Sterling Computer Ltd. v. P. Raman Kutty, I (1996) CPJ 118 (NC), the Honourable National Commission was concerned with the computer system supplied to the complainant and found to be defective from the date of its installation for want of vital parts for use in the proper working of the system. Referring to the decision of the Apex Court in Laxmi Engineering Works (supra), the Honourable National Commission has held that the complainant being contractor by profession, purchased the computer system for commercial purpose and, therefore, he could not be said to be a consumer as contemplated by the provision of definition of the term ''consumer''.

NOW, the facts which have been placed on record coupled with the documentary evidence produced by the complainants clearly indicate that computers in question were not purchased for earning livelihood of complainant Nos. 1 to 3 in their individual capacity. In fact they have filed this complaint in the name of complainant No. 4 Company as well as for and on behalf of complainant No. 4 Company. In this connection reference may be made to one more decision of the Honourable Supreme Court in the case of Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt. Ltd. & Anr., III (1999) CPJ 26 (SC)=VIII (1999) SLT 529=2000 (1) CPR 79 (SC). In that case a hospital purchased a CT Scan machine and only 10% patients were provided free service. The Honourable Supreme Court held that the purchase was for a commercial purpose. By virtue of such development of law, it becomes very clear that computers in question were purchased by complainant No. 4 Company, a private limited company for its business of consultancy service and, therefore, the complainants, by no stretch of imagination can be said to be consumers within the meaning of the word contained in Section 2(1)(d) of the Act. In any view of the matter, this complaint has to be dismissed as being outside the purview of the Act leaving the complainants to their own remedy before appropriate Court.

BESIDES, it is not in dispute that computers in question were taken for rendition of business with regard to the consultancy work as and when available. It is not clear whether the whole computer remained unused on account of the alleged defects. Referring to the balance- sheet produced with list Exh. 27, we had drawn the attention of the learned Advocate for the complainants to the total figure of estimated works of designing and likelihood of the execution of the jobs at the initial stage reflecting respectively Rs. 43,25,000/- and Rs. 15,75,000/-. The complainants have not been able to establish total closure of business or substantial arrest of business on account of alleged failure of the computers in question. They have merely referred to the payment of interest to Bank (Indian Bank) in the sum of Rs. 26,296.85, Rs. 1,23,339/- and Rs. 1,26,520/- respectively for the financial years 1990-91, 1991-92 and 1992-93. However, at best we would have directed the opponents to attend to the examination/inspection of the computers in question in presence of an independent computer expert and rectify the defects, if any, and if there was failure in the computer thereafter, to replace the computer on account of clear default on the part of the opponents in appearing before this Commission as directed from time- to-time had we accepted the complainants to be ''consumers'' in the eye of law. Since the complainants have not been able to correlate the alleged loss by placing on record documentary/ oral evidence it would not have been possible for this Commission to award any damages. With the aforesaid observations, we pass following order. The complaint is hereby dismissed, with no order as to costs. Complaint dismissed.